Venture capital: the more capital is involved in semiconductors, the better the bubble can be.

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 Venture capital: the more capital is involved in semiconductors, the better the bubble can be.


Xiong Weiming, Huachuang Capital Partner

On June 29, on the margin of the Future Forum 2019 Nanjing Summit, surging journalists interviewed Xiong Weiming, a partner of Huachuang Capital.

Xiong Weiming told Peng Mei that building wafer factories faces many challenges, but some vertical wafer factories, such as new materials, have opportunities for development in China in the future. When it comes to the involvement of capital in the semiconductor industry, Xiong Weiming said that a proper bubble is acceptable.

Speaking of Chinas industrial upgrading, Xiong Weiming believes that every time Chinas industry changes, a batch of catfish will come in and issue licences to companies in the forefront of innovation. This catfish effect has played a great role in promoting Chinas overall industrial upgrading.

Xiong Weimings investment in Huachuang Capital-led technology includes Blue Arrow Aerospace, Aibi Intelligence, Wenyuan Knows and Does, and Deeply Learns Science and Technology.

Wafer factories based on new materials have opportunities for development in China

Speaking of investment in the semiconductor industry, Xiong Weiming introduced that the feedback cycle of the semiconductor industry is slow.

Semiconductor industry is a bit like medical treatment, feedback cycle is slow. It takes a long time to design, stream, make, test and feedback. Xiong Weiming said, You have to predict the future. Its very difficult.

There are three main business models in semiconductor industry: IDM, Foundry and Fabless. IDM (Integrate Design Manufacturing) mainly refers to a semiconductor manufacturer that integrates the whole industrial chain of integrated design, manufacturing and packaging testing. The main companies include Intel, Samsung and so on. Foundry is an enterprise that only makes chips, but not designs, such as TSMC. Fabless is a company that only designs chips but not manufactures them. The main companies are Qualcomm, Nvidia and Broadcom.

According to Xiong Weiming, IDM is capital-intensive, while Fabless is not so capital-intensive, but there is no shortage of money in investing in Fabless China, and what seems to be lacking is not money. For example, high-end equipment, technical licenses can be bought, can be delivered on time.

Speaking of the construction of wafer factories, Xiong Weiming said, Its very difficult to procure equipment upstream, license technology, build factories, recruit workers and recruit teachers. Todays teachers are basically all Taiwanese accents. And the whole ecological problem, who will take over the work, what kind of product line, these are the challenges of wafer factories.

At the same time, Xiong Weiming also sees opportunities for the future of Chinas wafer factories based on new materials.

Now some vertical industry wafer factories, such as the so-called third generation semiconductor, GaN. Xiong Weiming said, These new materials based wafer factories in China may have an opportunity. For example, lenses like AR glasses need new materials.

The appropriate bubble in the semiconductor industry is OK.

Speaking of capital involvement in the development of semiconductor industry, Xiong Weiming said, I think the more money, the better.

Xiong Weiming said, Semiconductor has suffered for so many years because it has no money. Why dont students study semiconductors? Because it takes a lot of effort to find a job after graduation, and after Ph. D., the income is so low. So we all go to AI or finance or engineering to make money quickly. This is a common anxiety in China.

Xiong Weiming believes that the industry needs to send a signal: even if the downstream market is not yet large-scale shipments, at least the state or investors are willing to spend a lot of money, students or entrepreneurs at least survival is not a problem, in order to attract talent back.

So I think the proper bubble is OK, and all front-end things are not afraid of him more money and a little impetuous, as long as he can attract people back, Xiong Weiming said. 90% of the bubbles in the middle will be lost, and 10% of the people will stay behind to make a little bit of fame, which is great.

Catfish Effect of Market Innovation

Xiong Weiming said that every time the industry changes, the Chinese government will issue licences to companies in the forefront of innovation. This catfish effect has played a great role in promoting the overall industrial upgrading in China.

After the Alibaba was founded in 1999, it developed rapidly. In 2011, the central bank issued the first third party payment licences, including 27 companies including Alipay, fast cash, fortune paid, and La Carla. Xiong Weiming said that without licensing and the emergence of these new companies, big companies will not change, nor will big banks do pro-people services, downward infiltration and so on. I think Chinas good is that every time it changes its industry, it will put in a batch of catfish. Xiong Weiming said, There will be some catfish in every era. Speaking of the current hot automotive industry, Xiong Weiming said, I think Weilai is such a catfish. If he doesnt mix up here, those traditional joint ventures wont be in a hurry. Big ones like BYD Geely wont be in a hurry. They will continue to make 350,000 cars and shop in the countryside. They will pursue the cost completely and will not study so much technically. Xiong Weiming added, No amount of Tata (India Group) can produce a Tesla. These are two totally different worlds. Source: Wang Fengzhi _NT2541

After the Alibaba was founded in 1999, it developed rapidly. In 2011, the central bank issued the first third party payment licences, including 27 companies including Alipay, fast cash, fortune paid, and La Carla. Xiong Weiming said that without licensing and the emergence of these new companies, big companies will not change, nor will big banks do pro-people services, downward infiltration and so on.

I think Chinas good is that every time it changes its industry, it will put in a batch of catfish. Xiong Weiming said, There will be some catfish in every era.

Speaking of the current hot automotive industry, Xiong Weiming said, I think Weilai is such a catfish. If he doesnt mix up here, those traditional joint ventures wont be in a hurry. Big ones like BYD Geely wont be in a hurry. They will continue to make 350,000 cars and shop in the countryside. They will pursue the cost completely and will not study so much technically.

Xiong Weiming added, No amount of Tata (India Group) can produce a Tesla. These are two totally different worlds.